Emerging Market Stocks Are too Cheap to Ignore

Emerging market shares may rise 13% to 15% over the next five years, trouncing expected U.S. gains.

Slumping emerging-market stocks are now priced to return an average of 13% to 15% a year over the next five years. But soaring U.S. shares are priced to return just 2% to 4% over the same stretch. That's according to Jason Hsu, chief investment officer at Research Affiliates, a Newport Beach, Calif. money manager with more than $150 billion linked to its strategies.

Over the past three years, U.S. shares have shined, returning 13.1% a year, according to index publisher MSCI. That compares with 6.4% for euro zone shares and...